Bursa trading to remain lacklustre

by **Cals** Sat 03 Aug 2013, 22:26

Published: Saturday August 3, 2013 MYT 12:00:00 AM
Updated: Saturday August 3, 2013 MYT 8:40:13 AM
Bursa trading to remain lacklustre

BY CECILIA KOK

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[b style="margin: 0px; padding: 0px; border: none;"]REVIEW[/b]: Profit-taking activities ruled the local stock market on most days over the week, as investors turned cautious on the outlook of the global economy. Fitch Ratings’ downgrade of the sovereign credit outlook for Malaysia from “stable” to “negative” only served to exacerbate the already-weak investor sentiment and downward pressure faced by shares on Bursa Malaysia.
Performance of regional stock markets, on the other hand, were mixed, as investors took a wait-and-see stance to digest economic data from China and the outcome of the US Federal Reserve’s policy meeting.
The benchmark FBM Kuala Lumpur Composite Index (KLCI) on Monday fell 8.83 points to 1,798.78, off an early high of 1,808.66, on weak buying momentum and investors cashing in on gains on lower-liners. On a day that saw losers trumping gainers 583 to 214, trade was relatively slow with only 1.2 billion shares worth RM1.73bil changing hands.
Japan’s Nikkei 225 fell 468.9 points to 13,661, as yen strengthened against the US dollar, hurting Japanese exporters. Investors in the region were also cautious ahead of Chinese manufacturing data and the US Federal Reserve’s policy meeting.
Hong Kong’s Hang Seng Index (HIS) fell 118.8 points to 21,850.15, while Singapore’s Straits Times Index (STI) saw a marginal gain of only 0.87 of a point to 3,236.97.
Shares on Bursa continued its decline on Tuesday, with the FBM KLCI losing 3.7 points to close at 1,795.08. Market observers attribute the fall to foreign selling.
Volume was heavy at 2.15 billion shares worth RM2.07bil changing hands on a trading day that saw 436 counters registering losses, and only 299 registering gains.
Major Asian stock markets rebounded, as sentiment improved following China’s central bank move to support the country’s money market, while the weakening of the yen helped exporters.
Nikkei gained 208.7 points to 13,869.82, while HSI was up 103.8 points to 21,953.96 and STI rose 8.5 points to 3,245.45.
Wednesday saw the Malaysian stock market being battered heavily by foreign selling following Fitch’s downgrade of Malaysia’s credit rating outlook from “stable” to “negative”.
The FMB KLCI plunged 22.46 points to 1,772.62, with 1.92 billion shares worth RM3.05bil changing hands. There were 751 counters in the negative territory, and only 133 posted gains.
Major Asian stock markets were also in the red as investors await the conclusion of US Fed’s policy meeting. Nikkei was down 201.5 points to 13,668.32, HSI fell 70.3 points to 21,883.66 and STI lost 23.52 points to close at 3,221.93 on Wednesday.
With shares having fallen into an oversold territory, a rebound was only to be expected for Bursa. And rightly so, on Thursday, the FBM KLCI edged up 5.2 points to close at 1,777.82, with 537 counters posting gains and 233 losses.
Volume was moderate at 1.46 billion shares worth RM2.13bil changing hands.
The rebound of shares on Bursa was in line with the performance of regional stock markets, which was supported by overnight gain in US equities. Investor sentiment was shored up by US Fed’s decision to maintain its bond-buying programme at current levels as well as better-than-expected manufacturing data from China and Europe.
Nikkei rose 337.5 points to 14,005.77, HSI gained 205.13 points to 22,088.79 and STI was up 21.36 points to 3,243.29.
Shares on Bursa continued to trade in the positive territory yesterday, with the FBM KLCI gaining 4.69 points to close at 1,782.51.
Market volume was thinner with 1.2 billion shares valued at RM1.84bil changing hands, and in terms of market breadth, there were 400 gainers against 315 losers, while 321 counters were unchanged.
Regional stocks also performed better on Friday, as global manufacturing reports beat forecasts and central banks remained committed to their stimulus measures.
Nikkei rose 460.39 points to 14,466.16, while HSI and STI gained 102.18 points to 22,190.97 and 10.84 points to 3,254.13, respectively.
[b style="margin: 0px; padding: 0px; border: none;"]OUTLOOK[/b]: It will be a short week for the local stock market, as the nation will be celebrating Hari Raya Aidilfitri on Thursday and Friday and most traders are expected to be away during the holidays. As such, trading is expected to remain lacklustre and volume to be thin.
Analysts expect to see the FBM KLCI moving in a range-bound trade in the week ahead.
Resistance level for the local benchmark index is tagged at 1,811, at which market gains will be capped.
Support levels, on the other hand, are expected to range between 1,765 and 1,777.
TA Research in its newly issued report argues that there is a potential of the FBM KLCI staging a 3% correction to 1,722 this month.
There will be more economic data for investors to digest in the week ahead. Among these are US trade balance and non-manufacturing index; China’s trade, inflation and services index; as well as Malaysia’s trade and industrial production data.